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TITLE 26-INTERNAL REVENUE CODE section 48(h) shall be applied for purposes of paragraphs (3), (4), and (5) of this subsec- tion. (B) For purposes of paragraphs (2), (4), and (5), if section 1250 property which is not property described in subsection (a) when its original use commences, becomes property described in subsection (a) after July 24, 1969, such property shall not be treated as property the original use of which commences with the taxpayer. (C) Paragraphs (4) and (5) shall not apply in the case of section 1250 property ac- quired after July 24, 1969, pursuant to a written contract for the acquisition of such property or for the permanent financing thereof, which was, on July 24, 1969, and at all times thereafter, binding on the taxpay- er. (k) Depreciation of expenditures to rehabilitate low- income rental housing (1) 60-month rule The taxpayer may elect, in accordance with regulations prescribed by the Secretary, to compute the depreciation deduction provided by subsection (a) attributable to rehabilita- tion expenditures incurred with respect to low-income rental housing after July 24, 1969, and before January 1, 1978, under the straight line method using a useful life of 60 months and no salvage value. Such method shall be in lieu of any other method of com- puting the depreciation deduction under sub- section (a), and in lieu of any deduction for amortization, for such expenditures. (2) Limitations (A) The aggregate amount of rehabilita- tion expenditures paid or incurred by the taxpayer with respect to any dwelling unit in any low-income rental housing which may be taken into account under paragraph (1) shall not exceed $20,000. (B) Rehabilitation expenditures paid or incurred by the taxpayer in any taxable year with respect to any dwelling unit in any low-income rental housing shall be taken into account under paragraph (1) only if over a period of two consecutive years, including the taxable year, the aggre- gate amount of such expenditures exceeds $3,000. (3) Definitions For purposes of this subsection- (A) Rehabilitation expenditures The term "rehabilitation expenditures" means amounts chargeable to capital ac- count and incurred for property or addi- tions or improvements to property (or relat- ed facilities) with a useful life of 5 years or more, in connection with the rehabilitation of an existing building for low-income rental housing; but such term does not in- clude the cost of acquisition of such build- ing or any interest therein. (B) Low-income rental housing The term "low-income rental housing" means any building the dwelling units in which are held for occupancy on a rental basis by families and individuals of low or moderate income, as determined by the Sec- retary in a manner consistent with the Leased Housing Program under section 8 of the United States Housing Act of 1937 pur- suant to regulations prescribed under this subsection. (C) Dwelling unit The term "dwelling unit" means a house or an apartment used to provide living ac- commodations in a building or structure, but does not include a unit in a hotel, motel, inn, or other establishment more than one-half of the units in which are used on a transient basis. (D) Rehabilitation expenditures incurred Rehabilitation expenditures incurred pur- suant to a binding contract entered into before January 1, 1978, and rehabilitation expenditures incurred with respect to low- income rental housing the rehabilitation of which has begun before January 1, 1978, shall be deemed incurred before January 1, 1978. (1) Reasonable allowance in case of property of cer- tain utilities (1) Pre-1970 public utility property (A) In general In the case of any pre-1970 public utility property, the term "reasonable allowance" as used in subsection (a) means an allowance computed under- (I) a subsection (1) method, or (ii) the applicable 1968 method for such property. Except as provided in subparagraph (B), clause (ii) shall apply only if the taxpayer uses a normalization method of accounting. (B) Flow-through method of accounting in cer- tain cases In the case of any pre-1970 public utility property, the taxpayer may use the applica- ble 1968 method for such property if- (i) the taxpayer used a flow-through method of accounting for such property for its July 1969 accounting period, or (ii) the first accounting period with re- spect to such property is after the July 1969 accounting period, and the taxpayer used a flow-through method of account- ing for its July 1969 accounting period for the property on the basis of which the ap- plicable 1968 method for the property in question is established. (2) Post-1969 public utility property In the case of any post-1969 public utility property, the term "reasonable allowance" as used in subsection (a) means an allowance computed under- (A) a subsection (1) method, (B) a method otherwise allowable under this section if the taxpayer uses a normal- ization method of accounting, or (C) the applicable 1968 method, if, with respect to its pre-1970 public utility proper- ty of the same (or similar) kind most recent- ly placed in service, the taxpayer used a Page 155 § 167